JUDGMENT : Tarlok Singh Chauhan, C.J. 1. Heard the parties. 2. The instant writ petition has been filed for grant of the following substantive reliefs:- “a. Quashing and setting aside the office order as contained in Memo no. 2095 dated 30.11.2023 (Annexure-10) by which the petitioner's services as Placement Agency has been terminated, the security deposit forfeited and further the petitioner company has been blacklisted for a period of three years; AND b. Quashing and setting aside the office order as contained in Memo no. 2096 dated 30.11.2023 (Annexure-11) by which the petitioner has been directed to hand over of retail liquor shops for its operation to another placement agency; AND c. Consequent to setting aside of the office order as contained in Memo no. 2095 dated 30.11.2023 and Memo no. 2096 dated 30.11.2023, reinstate the petitioner company's services as Placement Agency supplying manpower to Zone 3 (Ramgarh and Bokaro) and Zone 6 (Palamu, Garhwa and Latehar).” 3. During pendency of the writ petition, the petitioner filed I.A. No.5850 of 2025 confining its claim only to the extent of challenge to the blacklisting order passed by the respondents. It shall be apposite to extract the order in its entirety, which reads as under:- 4. The minimal facts, as necessary for the adjudication of the instant case are that the Jharkhand State Beverage Corporation Limited (“JSBCL”) had floated an electronic tender for empanelment of a placement agency in terms of the Jharkhand Excise (Operation of Retail Excise Shops by the Jharkhand State Beverage Corporation Limited) Rules, 2022 (hereinafter to be referred as the “Retail Rules, 2022”). 5. In the said e-tender process, the petitioner participated and was declared successful for two zones, being zone No. 3, comprising of districts of Ramgarh and Bokaro and zone No. 6, comprising of districts of Palamau, Garhwa and Latehar. 6. On being declared successful, a Letter of Intent was issued by the JSBCL vide letter No. 1731 dated 18.11.2022 and pursuant thereto, the petitioner deposited the requisite amount of bank guarantee as was mentioned in the letter dated 18.11.2022. 7. Thereafter, two agreements were executed by the JSBCL in favour of the petitioner for the above two zones. So far as zone No. 6 is concerned an agreement was executed on 24.02.2023 and whereas for zone No. 3, an agreement was executed on 31.07.2023. 8. 7. Thereafter, two agreements were executed by the JSBCL in favour of the petitioner for the above two zones. So far as zone No. 6 is concerned an agreement was executed on 24.02.2023 and whereas for zone No. 3, an agreement was executed on 31.07.2023. 8. After the petitioner had taken over the above two zones, the excise officers of the district had handed over a list of the employees, who were already employed by the former placement agency to continue the same men. 9. It is averred by the petitioner that it started performing the duties and discharging its obligations under the agreement without any complaint whatsoever, even though the condition related to Minimum Guaranteed Revenue caused an impediment in discharge of its function effectively. However, the Department of Excise purportedly on the basis of certain Newspaper items published on 18.09.2023 alleging financial irregularities in the District of Garhwa constituted a team of 5 members vide a memo No. 2255 dated 20.09.2023 headed by the Assistant Deputy Commissioner, Excise (Headquarter) as also the Excise Superintendent, EIB (Headquarter), Sub inspector, Excise, Lohardaga, representative of the Departmental Internal Auditors and Upper Division Clerk as its members, which carried out a surprise inspection of 54 retail excise shops in the District-Garhwa from 21.09.2023 to 23.09.2023. Thereafter, this Committee submitted its report to the Excise Commissioner, Jharkhand under the cover of a letter dated 29.09.2023 and in its report, the Committee had concluded that the petitioner had not handed over a sum of Rs.2,59,31,911/- collected from the sale of liquor to the cash collection agency and therefore, had misappropriated/diverted/caused financial irregularities. The report further indicted the Excise Superintendent of Garhwa and the internal auditors of the District of Garhwa. 10. It has been specifically averred in the petition that the respondents without even serving a copy of the said report to the petitioner vide letter dated 24.09.2023 addressed a letter to the authorized representative of the petitioner at Garhwa calling upon it to deposit the alleged defalcated amount of Rs.2,50,00,000/- without any delay failing which the amount would be recovered in accordance with law. The petitioner responded to the said letter vide letter dated 26.09.2023, wherein, it was requested that the shop wise details be provided to it, so that the guilty employee can be identified and steps can be taken to recover the money from them. 11. The petitioner responded to the said letter vide letter dated 26.09.2023, wherein, it was requested that the shop wise details be provided to it, so that the guilty employee can be identified and steps can be taken to recover the money from them. 11. The Excise Commissioner cum Managing Director, JSBCL, vide letter dated 06.10.2023 enclosed a copy of the enquiry report and directed the petitioner to file its written response within three working days. Accordingly, the petitioner vide its letter dated 10.10.2023 responded to the Inquiry report and in the said letter indicated that the petitioner had also independently carried out reconciliation of its account relating to 2 out of 54 shops inspected by the committee and found that the shortfall of the amount indicated in the report of the committee was on a higher side than the amount, which the petitioner on enquiry had found out and accordingly, requested the respondents to re-enquire into the matter. 12. The petitioner also annexed daily stock statements of the two shops in which the petitioner had carried out its investigation. However, in response to the said letter, the Excise Superintendent, Garhwa sent a reminder to the petitioner asking it to deposit an amount of Rs.2,59,31,911/- followed by another letter. Thereafter, the petitioner received another letter, bearing No. 2028, dated 14.11.2023 from the General Manager (Operations and Finance), JSBCL indicating that proof of only an amount of Rs.23,50,000/- had been deposited out of the total amount of Rs.2,59,31,911/- and the petitioner was directed to deposit the remaining amount within three days, failing which it was indicated that coercive action would be taken against the petitioner. The petitioner vide letter dated 07.11.2023 and further vide letters dated 16.11.2023, 22.11.2023 and 28.11.2023 sent in response to the letter bearing No. 2028 dated 14.11.2023 received from the General Manager (Operations and Finance), JSBCL, with proof of deposit of money recovered from the guilty and defaulted employees. The petitioner also informed that sincere efforts are being made for recovery of the amount from the employees responsible for the defalcation and the said were being deposited. The petitioner also informed that sincere efforts are being made for recovery of the amount from the employees responsible for the defalcation and the said were being deposited. However, the General Manager (Operations and Finance), JSBCL, issued an Office Order bearing memo No. 2095 dated 30.11.2023 informed the petitioner that since it had failed to deposit an amount of Rs.2,59,31,911/-, despite various reminders, the petitioner was considered to have violated the terms and conditions of the agreement consequent to which the services of the petitioner would be terminated with immediate effect and security deposit was ordered to be forfeited and the petitioner was recorded as one being blacklisted for a period of three years. In response to the aforesaid memo, the petitioner addressed a letter dated 01.12.2023 to the Commissioner-cum-Managing Director, JSBCL, stating that the requested reconciliation of the amount calculation and the total amount of Rs.2,59,31,911/- had been completely recovered from the employees. A date wise break-up of the phase-wise deposit of the total sum of Rs.2,59,31,911/- was attached and a request was made to remove the petitioner from blacklisting. However, since the respondents had failed to remove the same, hence, this petition. 13. It has been vehemently argued by Mr. Indrajit Sinha, learned counsel for the petitioner that no adequate and meaningful opportunity has been provided to the petitioner by way of show cause notice against the blacklisting and therefore, such direction on the part of the respondents is not sustainable in the eyes of law. 14. On the other hand, Mr. Raunak Sahay, learned counsel for Respondent Nos. 2 to 4 has vehemently contended that once the petitioner has been issued a notice clearly bringing to its notice that the respondents were contemplating certain coercive action, in case the amount in question is not deposited, then the petitioner cannot take any exception to the action of the respondents in blacklisting because coercive action would obviously include the action like blacklisting. 15. We have heard the learned counsel for the parties and have gone through the materials placed on record. 16. It is more than settled that the fundamental purpose behind the serving of show cause notice is to make the noticee understand the precise case set up against him which he has to meet. 15. We have heard the learned counsel for the parties and have gone through the materials placed on record. 16. It is more than settled that the fundamental purpose behind the serving of show cause notice is to make the noticee understand the precise case set up against him which he has to meet. Therefore, this not only requires the statement of imputations detailing out the alleged breaches and defaults one has committed, so that he gets an opportunity to rebut the same, but another requirement is the nature of the action, which is proposed to be taken for such a breach, that has to be clearly set out so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/ breaches complained of are not satisfactory. When it comes to black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action. 17. In Gorkha Security Services v. Government (NCT of Delhi) and Others, (2014) 9 SCC 105 , the Hon’ble Supreme Court observed that it was incumbent upon the petitioner to issue show- cause notice and also afford an opportunity of hearing to the petitioner prior to taking debarment action. The relevant paragraphs are reproduced hereunder- "16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts. 17. Way back in the year 1975, this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B., highlighted the necessity of giving an opportunity to such a person by serving a show-cause notice thereby giving him opportunity to meet the allegations which were in the mind of the authority contemplating blacklisting of such a person. 17. Way back in the year 1975, this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B., highlighted the necessity of giving an opportunity to such a person by serving a show-cause notice thereby giving him opportunity to meet the allegations which were in the mind of the authority contemplating blacklisting of such a person. This is clear from the reading of paras 12 and 20 of the said judgment. Necessitating this requirement, the Court observed thus: (SCC pp. 74-75) “12. Under Article 298 of the Constitution the executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality. * 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist.” 18. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist.” 18. Again, in Raghunath Thakur v. State of Bihar, (1989) 1 SCC 229 the aforesaid principle was reiterated in the following manner: (SCC p. 230, para 4) “4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do in accordance with law i.e. after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness or otherwise of the allegations made against the appellant. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness or otherwise of the allegations made against the appellant. The appeal is thus disposed of.” 19. Recently, in Patel Engg. Ltd. v. Union of India, (2012) 11 SCC 257 speaking through one of us (Jasti Chelameswar, J.) this Court emphatically reiterated the principle by explaining the same in the following manner: (SCC pp. 262-63, paras 13- 15) “13. The concept of ‘blacklisting’ is explained by this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B. as under: (SCC p. 75, para 20) ‘20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains.’ 14. The nature of the authority of the State to blacklist the persons was considered by this Court in the abovementioned case and took note of the constitutional provision (Article 298), which authorises both the Union of India and the States to make contracts for any purpose and to carry on any trade or business. It also authorises the acquisition, holding and disposal of property. This Court also took note of the fact that the right to make a contract includes the right not to make a contract. By definition, the said right is inherent in every person capable of entering into a contract. However, such a right either to enter or not to enter into a contract with any person is subject to a constitutional obligation to obey the command of Article 14. Though nobody has any right to compel the State to enter into a contract, everybody has a right to be treated equally when the State seeks to establish contractual relationships. The effect of excluding a person from entering into a contractual relationship with the State would be to deprive such person to be treated equally with those, who are also engaged in similar activity. 15. It follows from the above judgment in Erusian Equipment case that the decision of the State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into the contractual relationship with such persons is called blacklisting. 15. It follows from the above judgment in Erusian Equipment case that the decision of the State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into the contractual relationship with such persons is called blacklisting. The State can decline to enter into a contractual relationship with a person or a class of persons for a legitimate purpose. The authority of the State to blacklist a person is a necessary concomitant to the executive power of the State to carry on the trade or the business and making of contracts for any purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon the exercise of such an authority is that the State is to act fairly and rationally without in any way being arbitrary— thereby such a decision can be taken for some legitimate purpose. What is the legitimate purpose that is sought to be achieved by the State in a given case can vary depending upon various factors.” 20. Thus, there is no dispute about the requirement of serving show-cause notice. We may also hasten to add that once the show-cause notice is given and opportunity to reply to the show-cause notice is afforded, it is not even necessary to give an oral hearing. The High Court has rightly repudiated the appellant’s attempt in finding foul with the impugned order on this ground. Such a contention was specifically repelled in Patel Engg.” 18. Similar reiteration of law can be found in the judgment rendered by the Hon’ble Supreme Court in Vetindia Pharmaceuticals Ltd. v. State of Uttar Pradesh and Another, (2021) 1 SCC 804 , wherein the Hon’ble Supreme Court held that it was incumbent on the part of the Department to state in the show- cause notice that the competent authority intended to impose such a penalty of blacklisting so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. The Hon’ble Supreme Court held that there must be a clear inference from show-cause notice that blacklisting action is proposed. 19. The Hon’ble Supreme Court held that there must be a clear inference from show-cause notice that blacklisting action is proposed. 19. Yet again, similar reiteration of law can be found in another judgment of the Hon’ble Supreme Court in UMC Technologies (P) Ltd. v. Food Corporation of India and Another, (2021) 2 SCC 551 , wherein the Hon’ble Supreme Court reiterated that for show- cause notice to constitute the valid basis of a blacklisting order, such notice must spell out clearly, or its contents be such that it can be clearly inferred therefrom that there is intention on the part of the issuer of the notice to blacklist the noticee. The Hon’ble Supreme Court further held that existence of a clause in the bid document, which mentions blacklisting as a bar against eligibility, cannot satisfy the mandatory requirement of a clear mention of the proposed action in the show-cause notice. Lastly, it was held that requirement of a valid, particularized and unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatization that accrues to the person/entity being blacklisted. 20. Earlier to this, the Hon’ble Supreme Court in Daffodills Pharmaceuticals Ltd. v. State of Uttar Pradesh and Another, (2020) 18 SCC 550 , held that blacklisting has the effect of preventing a person from privilege and advantage of entering into lawful relationship with the Government for purposes of gain. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on blacklist. 21. Merely because the Government has a right to enter into contract with anyone of its choice does not give the Government the power to arbitrarily blacklist a party without affording it a fair hearing as blacklisting involves material damage of losing the prospect of entering into contracts with the Government in future. 22. The effect of blacklisting, needless to observe, is quite drastic. It prevents a person from the privilege and the advantage of entering into lawful relationship with the Government, PSUs for the purposes of gain. Apart from reducing the person’s prospects of making profits, it leads to loss of credibility and goodwill, a decline in business, and clients, besides causing financial hardship. It prevents a person from the privilege and the advantage of entering into lawful relationship with the Government, PSUs for the purposes of gain. Apart from reducing the person’s prospects of making profits, it leads to loss of credibility and goodwill, a decline in business, and clients, besides causing financial hardship. It virtually acts as a libel to the person if unjustifiably done. 23. This is precisely the reason why the courts of law have, time and again, established certain principles before blacklisting a person which include (a) Principles of natural justice and (b) Doctrine of proportionality. The ‘doctrine of proportionality’ here would essentially have to be understood as, maintaining a proper balance between the adverse effects which the administrative order may have on the rights, persons, keeping in mind the purpose for which they intend to serve. 24. Reverting back to the facts of the instant case, since the petitioner has not been issued any show cause notice or afforded an opportunity of personal hearing and straightway being blacklisted, the action of blacklisting vide the impugned letter No. 2095, dated 30.11.2023 cannot stand to judicial scrutiny and the said letter is accordingly, quashed and set aside. The writ petition is accordingly, allowed. However, this order shall not come in the way of the respondents, in case they chose to further proceed in the matter by issuing a show cause notice to the petitioner, (if they still intent to blacklist the petitioner) and thereafter proceed in accordance with law by affording an opportunity of hearing to the petitioner. 25. Pending application(s), if any, shall also stand disposed of.